Bullish Monday Becomes Tight Range Monday
by Jerome "Mel" Hickerson, MarketsPath.com
The week began with Asia green, most likely a reaction to our positive Friday, and with Europe flat. Our futures overnight were flat and the pre-market traded within an unusually tight range, suggesting that we’d have a flat regular session as well. The SPX opened with a small pop upward setting the high of the session at 9:41, proceeded to chop lazily sideways and set the low of the day at 11:34. The rest of the session was a tight range five wave up then down pattern.
The trading range was among the tightest ranges (based on percentage of the SPX opening price) seen ever. The index traded within 0.10% of the tightest ranges going back as far as my intraday day data goes (1962). Volume was also the lowest of 2010. Thankfully, days like this are rare and usually lead to range expansion.
Since November, I have mentioned many times the similarities with late summer and early fall of 2007. Once again, let’s take a look at the eerie similarities.
Notice how the periods both began with tight range trading, then a 52 week high followed by two quick multi-day plunges. During both periods, the VIX had nasty spikes during those plunges – you may recall that during each of our late January/February ugly moves downward, I kept bringing up the 2007 moves and reminding people that a new high could still be ahead sometime in March. Now we are making the climb back up towards the January 52 week high. If we continue to follow close to the 2007 pattern, we should see a mild pullback followed by a surge to new highs.
For Tuesday, it seems likely that if a pullback is to occur before we reach 1150; it should begin here and now. The model continues to call for a mild pullback but breadth continues to call for higher. We are reaching a tipping point where something should happen; stay tuned, I don’t think we have long to wait before the path is clearly illuminated.
SPX Summary for Monday, March 08, 2010
232 Advancers/257 Decliners
Today's SPX component winners and losers:
• Largest one day loser is AKS with -3.01%
• Largest three day loser is NOVL with -4.60%
• Largest five day loser is SPLS with -12.06%
• Largest ten day loser is HRB with -16.92%
• Largest one day winner is MET with 4.93%
• Largest three day winner is ANF with 19.77%
• Largest five day winner is NOVL with 22.32%
• Largest ten day winner is CCE with 33.59%
*** SPX Technical Summary ***
The lowest 14 day RSI component is HRB; the highest 14 day RSI component is MIL. The average 14 day RSI of all 500 components is 67.
The greatest positive five day momentum component is NOVL; the greatest negative five day momentum component is SPLS. The average five day momentum of all 500 components is 2.57.
82.00% of the SPX components are giving a crossover Buy signal; 3.60% of the SPX components are giving a Sell signal. This is a 22.8 to 1 ratio of Buy signals over Sell signals.
SPX component signal changes today (evidence of trend):
• From Sell to Neutral: 8 components.
• From Buy to Neutral: 14 components.
• From Neutral to Sell: 4 components.
• From Neutral to Buy: 18 components.
Tuesday, March 9
Economics
No significant economic events scheduled.
Earnings
Before: BRNC, DKS, EJ, EXEL, KR, SSI, SWSI, TSTY
After: AONE, AVAV, ALOG, SAM, PSS, FLOW, JCG, SLXP, ZIPR
Auction
01:00 3yr Note Auction
Speeches
09:30 Charles Evans
Events
CAT, URI at UBS Industrial Conference-Chicago
CNW, MAS, TSCO, AZO at Raymond James Institutional Investors Conference
CAL, GR, BA, LCC at JPMorgan Aviation, Transportation & Defense Conference
MXIM, TLAB, RVBD, BRCM at Jefferies & Co Global Technology Conference
BKC, DLM at Goldman Sachs Consumer/Retail Leveraged Finance Conference
LEAP, CMCSA, TIVO, PAET at Credit Suisse Group Global Media and Communications Conference
PFE, JNJ, MRK, MDT at Cowen and Company Healthcare Conference
FL Analyst Meeting
ARTG, CAVM, TSYS, AMD at Wedbush Morgan Securities New York MAC: Management Access Conference
VITA, HRC, SYK, ATEC at Canaccord Adams Musculoskeletal Conference
CVX 2010 Security Analyst Meeting
SYMM Analyst Meeting
Mel’s Random Hits:
• Total tick for the day was +244,000. This is unusually high for a negative close on the SPX, but breadth continues to be stunningly positive. Breadth was positive the entire session with the exception a brief period around 11:15am.
• The day's range was 4.28 points. This is also stunning and quite rare (thankfully).
• The day's volume was 71.5% of the average daily volume for the last year. Volume was 92.3% of the last 10 day average and 94.2% of Friday’s volume. This was the lowest volume of 2010.
• 38% of the SPX stocks closed with two day RSI above 90. 50% closed with RSI above 80. 4% closed with RSI below 20 and 2% closed with RSI below 10.
• 82.0% of the SPX are above their five day moving average, 91.0% are above their 10 day average, and 93.8% are above their 20 day moving average.
• 11% of the SPX stocks closed below their most recent previous lows.
• 36% of the SPX closed above their most recent previous high.
• 45.2% of stocks closed in the top half of the day's range. (54.8% closed in bottom half.)
• 21.2% of stocks closed in the bottom 20% of the day's range.
• 6.4% of stocks closed in the top 10% of the day's range.
• 28.4% of stocks closed within 2% of their 52 week high. 48.8% of stocks closed within 5% of their 52 week high.
• 25.2% of stocks closed within 50% of their 52 week low. 8.2% of stocks closed within 25% of their 52 week low.
• 13.2% of stocks closed within ¼% of their high for the day.
• 20.4% of stocks closed within ¼% of their low for the day.
• 47.0% of the SPX closed up from the previous close; 43.2% closed higher than the open.
• Sectors weaker than the SPX for the day: Energy, Industrials, Consumer Staples, and Health Care.
• Sectors stronger than the SPX for the day: Technology, Financials, Utilities, Basic Materials, and Consumer Discretionary.
• The $SOX index strength was again weaker again than the SPX today, nine of the last twelve sessions. It’s interesting – and a bit unusual – to see the $SOX weaker than the SPX while technology stocks are outperforming. This is a divergence that may we may look back upon as important.
• The 2 Day RSI of the SPX is 99. The Dow RSI is 91, NASDAQ is 99 and Russell 99.
• Over the last four sessions, the average session closed 62% of the range above the low.
• Upside momentum moderated from Friday’s 3.95 to today’s 2.57. The ratio of SPX components giving a crossover buy signal compared to sell signals has exploded to almost 23 to 1. This is an unusual ratio to see. Here’s why it can be important: A lot of traders buy a stock when the 5 MA moves above the 20 MA. But many traders won't touch it once they've missed the crossover. When things reach this level of overbought, many traders will patiently wait rather than jump.
• 180 SPX components moved upward and 172 components downward during the after hours with 120 million shares traded.
• Our trade signal remains Sell.
Have a great Tuesday everyone!
-----------
"Mel"
ETF’s we trade:
Ultra S&P500 ProShares (NYSE: SSO)
Ultra Dow30 ProShares (NYSE: DDM)
Ultra QQQ ProShares (NYSE: QLD)
PS UTLRSHRT QQQ (NYSE: QID)
UltraShort S&P500 ProShares (NYSE: SDS)
UltraShort Dow30 ProShares (NYSE: DXD)
PowerShares QQQ Trust (NASDAQ: QQQQ)
Direxion Daily Small Cp Bear 3X (NYSE:TZA)
Direxion Daily Small Cp Bull 3X (NYSE:TNA)
